Milliman Irix® - Risk Score with Credit Data

^{February 2020}

Munich Re Life US assessed Milliman Irix^® - Risk Score with Credit Data, a predictive modeling tool developed and owned by Milliman that assesses mortality risk through the combination of an individual’s prescription drug and Fair Credit Reporting Act-compliant credit information. Insurers interested in prescription- and credit-based mortality scores should perform a retrospective validation study using their own experience data. Munich Re can assist carriers with the retrospective study, advise on changes to mortality assumptions, and recommend ways to incorporate the scores to streamline the underwriting process.

Milliman Irix^® - Risk Score with Credit Data is a proprietary scoring algorithm that combines prescription drug history and credit attributes to predict the mortality risk of individuals relative to other individuals of the same age and gender.

In 2018, Munich Re assessed Irix^® - Risk Score 2.0, a score based on prescription drug history (“Prescription-only Score”), and concluded the scores are predictive of mortality for the U.S. insurance applicant population.¹ Since then, Milliman has incorporated credit attributes to produce the Irix^® - Risk Score with Credit Data (“Combined Score”). Carriers currently using Prescription-only Scores typically establish thresholds and decision guidelines to streamline their underwriting process while managing mortality risk.

Milliman provided Munich Re a dataset comprised of 10 million lives sampled from the U.S. general insurance applicant population which includes life, health, LTC, DI, final expense and Medicare supplement lines of business. Life represents the majority of the dataset. Prescription-only and Combined Scores were provided, which range within 0.0 and 10.0.

Munich Re performed an analysis of Risk Score with Credit Data and confirmed it is predictive of mortality for the U.S. insurance applicant population. Compared to a Prescription-only Score, the Combined Score increases the volume of scored individuals and more effectively stratifies mortality risk. A company-specific insured population is not expected to have identical underlying characteristics as this insurance applicant population; Munich Re recommends replicating the study on a company-specific insured dataset to help assess the value of Score with Credit Data.

Life insurers interested Risk Score with Credit Data should conduct a retrospective study in order to calibrate the tool to the carrier’s own underwriting paradigm. This process will help carriers balance the score with the expected mortality of their unique target markets, distribution channels, and underwriting processes. For carriers who are already using a prescription-only or credit-based mortality score, a Combined Score provides a more holistic assessment of mortality.

Key Findings

• Risk Score with Credit Data combines prescription history and credit information (“Combined Score”). Relative mortality risks increase as the Combined Score increases.
• Risk Score with Credit Data allows carriers to identify more lives with better mortality compared to a prescription-only Risk Score (“Prescription-only Score”), particularly for ages below 60.
• A Combined Score is provided for an individual with prescription history only, credit information only, or a combination of both. Thus, the number of individuals with an Irix® - Risk Score is greater than when using a Combined Score compared to a Prescription-only Score.
• The Combined Score effectively stratifies mortality risk across age groups. It is more effective at identifying high mortality risk when prescription history is available, except for ages 80 and above.
  
• The Combined Score is especially effective at segmenting mortality risk for earlier durations, similar to the Prescription-only Score.